Houser Firm

Does a business need to be split evenly between heirs?

On Behalf of | Jun 15, 2023 | Estate Planning

For many business owners, the business itself is their most valuable asset and one of the most complicated to divide. They hope to leave it to the next generation. Most of them – 60%, according to one study – are going to split things up equally. If they have two children, each one gets 50%, and they have to work together to lead the business into the next generation.

But do you have to do this? You certainly do not. It’s not required for you to leave equal amounts to all heirs, and you don’t even have to leave any part of the business to any of your heirs. What you decide to do with that company is completely up to you. In fact, there are those that argue that the division of assets can be unequal and still be more “fair” than it would have been if everyone received the same share.

Why would you do this?

One reason to do this is if you don’t think your heirs will be able to work together. You already know how well your children get along – or how often they disagree. Say you have two children and you think that your business is going to suffer if they have to try to work together to run it. Therefore, you may decide to leave the company to one and other family assets to the other.

Another reason to do this is just that one of your children may be highly qualified and capable of running a business, while the other is not. Maybe you need a highly technical degree to run the company successfully. You may feel much more comfortable leaving the business to the person with the skills to run it.

No matter what you decide, properly establishing your estate plan in advance is beneficial. Be sure you know what steps to take.